CBUAE Approves Digital Asset Custodial Risk Insurance

According to Cointelegraph, the Central Bank of the United Arab Emirates (CBUAE) has approved a new product that allows issuers to provide digital assets custodial risk insurance. Hong Kong-based insurance provider OneDegree and the UAE’s Dubai Insurance have announced that they are now offering this insurance to UAE customers under the brand name 'OneInfinity.' The approval from CBUAE enables these companies to provide custodial risk insurance, which is a crucial part of risk management strategies for custodians, exchanges, and other digital asset service providers. OneDegree noted that many regulators worldwide require this type of insurance. Robin Scott, the general manager of OneDegree in the Middle East, explained that custodial risk insurance offers protection against the risk of losing access to digital assets. This insurance covers Web3 exchanges, custodians, asset managers, and others against risks such as hacking events, physical damage to storage media, or internal fraud. Scott likened custodial risk insurance to public deposit protection schemes used in traditional banking, stating that it acts as a private sector solution for the Web3 industry to achieve similar aims. Scott further mentioned that regulators globally mandate this product to ensure consumer protection. They want to make sure that businesses and individuals using licensed digital asset platforms are safeguarded in case of asset losses. The approval from CBUAE means that companies in the UAE can now acquire custodial risk insurance domestically for the first time. Scott added that OneDegree and Dubai Insurance have already begun providing this insurance to UAE-based clients and expect a significant demand as more companies get licensed in the UAE.